New Washington state law bans noncompete agreements • Hacker News Board

Re: New Washington state law bans noncompete agreements

#61

Post by cortesoft » Mon, Mar 30, 2026, 6:56 PM UTC

mzi wrote: post #40

jeffreyrogers wrote: post #14

The only time I see non-competes as reasonable is when someone sells a business. It seems fair to put a territory restriction on a seller so the new owner doesn't have to immediately start competing against the person they bought out.

Here in Sweden non-competes without a financial agreement is void. And those that offer some financial are probably OK, but haven't been tried extensively. The non-competes I've signed have offered 60% of my base pay for six months (the length of the non-compete) if I cannot find a job because of the contract if the company exercise it. They never have exercised it for me.

Those sorts of agreements are generally still allowed with these anti non-compete laws. If there is a specific non-compete contract that is signed, with money being paid for it directly, that is fine. That is a normal contract where both sides trade something of value.

The types that are banned are ones that set the restriction as a part of a normal employment contract, where there is no specific compensation given for accepting the non-compete and where the employee can't decide to abandon the non-compete in return for not getting the extra money.

Re: New Washington state law bans noncompete agreements

#62

Post by hedgehog » Mon, Mar 30, 2026, 6:56 PM UTC

dismalaf wrote: post #43

This feels a tad heavy-handed and will make it tougher to sell a business without hard assets. It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

Why would it affect selling a business?

Re: New Washington state law bans noncompete agreements

#63

Post by dragonwriter » Mon, Mar 30, 2026, 6:57 PM UTC

otterley wrote: post #30

Why wait until 2027, instead of making it effective immediately?

Because Washington has a Constitutional provision requiring that no law shall take effect sooner than 90 days after the end of the session in which it is adopted [0] unless it is an emergency law passed with a 2/3 vote, and the common convention for most normal laws is to set the first January 1 certain to come after the 90-day period of the current session as the effective date so that "new law day" for non-emergency laws is consistent.

[0] Each state is different here, but a "90 days after end of session", or "90 days after passage" rule for the soonest a passed bill can go into effect, with exceptions for emergency bills with special rules including a supermajority requirement, are pretty common, as are conventions of setting a January 1 effective date in the legislation itself when the minimum is X days from end of session or passage.

Re: New Washington state law bans noncompete agreements

#64

Post by ChuckMcM » Mon, Mar 30, 2026, 6:57 PM UTC

If you had asked me in 1995 what was the one thing[1] that Boston could change in order to compete with Silicon Valley I would have told you "Make non-compete agreements illegal" Companies in the Bay Area whined about it all the time but it kept the ecosystem vibrant and a lot of technology exists because of that. In the late 90's early '00s a big reason for a lot of 'high profile' people quitting their cushy job and setting out in a startup was because 'management' wouldn't allow them to move forward on an idea that they felt would "disrupt our own business." Those same people could quit, create a start up, and make that idea real anyway. So this is excellent progress for Washington State. I wonder how many ex-Microsoft employees this effects.

[1] I vacillated between this and California law giving ownership of what you worked on in your own time on your own equipment yours, except the latter was pretty effectively neutered by big corps defining their businesses more vaguely.

Re: New Washington state law bans noncompete agreements

#65

Post by remarkEon » Mon, Mar 30, 2026, 6:57 PM UTC

jkingsbery wrote: post #44

remarkEon wrote: post #34

Earlier quoted context omitted.

What's the actual steel man argument for why noncompetes are good? I've never really encountered one, just seen the corporate advocacy that they don't want to deal with high employee turnover. Best I can do: Non-competes are (possibly) unenforceable anyway, so signing one maybe acts as a value signal for the employee? "I'd have to violate my non-compete, so in order to do that and permanently burn the bridge with my…

I am glad most places are getting rid of non-competes. But here is the best argument I've heard for them: For many companies, a lot of their value is in their intellectual property. Non-competes exist not because the company will enforce it against employees (they might, but they usually don't), but more as a fig-leaf to potential investors down the line asking about the value of the intellectual property. The argume…

Okay this I do buy, but that would only explain non-competes for startups, right?

Re: New Washington state law bans noncompete agreements

#66

Post by dismalaf » Mon, Mar 30, 2026, 6:59 PM UTC

hedgehog wrote: post #62

dismalaf wrote: post #43

This feels a tad heavy-handed and will make it tougher to sell a business without hard assets. It should just be banned for employees or require a payout of (previous salary) * (length of non-compete).

Why would it affect selling a business?

Previous owner can start the same business immediately and poach all the clients, reducing the value of the sold business to zero. Buyers obviously anticipate this and won't buy the business without the non-compete.

Re: New Washington state law bans noncompete agreements

#67

Post by hedgehog » Mon, Mar 30, 2026, 7:00 PM UTC

dismalaf wrote: post #66

hedgehog wrote: post #62

Earlier quoted context omitted.

Why would it affect selling a business?

Previous owner can start the same business immediately and poach all the clients, reducing the value of the sold business to zero. Buyers obviously anticipate this and won't buy the business without the non-compete.

That would violate a non-compete attached to the sale.

Re: New Washington state law bans noncompete agreements

#68

Post by curuinor » Mon, Mar 30, 2026, 7:01 PM UTC

tzs wrote: post #50

The article covers this, but probably worth having it mentioned here too: Washington already had partially banned noncompete agreements. They were banned for employees who made less the $127k/year or contractors who made less than $317k. Those numbers were adjusted annually for inflation. Edit: less/more mixup fixed

Less than, not more than

Re: New Washington state law bans noncompete agreements

#69

Post by mzi » Mon, Mar 30, 2026, 7:01 PM UTC

cortesoft wrote: post #61

mzi wrote: post #40

Earlier quoted context omitted.

Here in Sweden non-competes without a financial agreement is void. And those that offer some financial are probably OK, but haven't been tried extensively. The non-competes I've signed have offered 60% of my base pay for six months (the length of the non-compete) if I cannot find a job because of the contract if the company exercise it. They never have exercised it for me.

Those sorts of agreements are generally still allowed with these anti non-compete laws. If there is a specific non-compete contract that is signed, with money being paid for it directly, that is fine. That is a normal contract where both sides trade something of value. The types that are banned are ones that set the restriction as a part of a normal employment contract, where there is no specific compensation given f…

Yeah, those contracts are not valid here as the right to livelihood will trump that contract.

So even if you sign that clause you are not bound by it.

Re: New Washington state law bans noncompete agreements

#70

Post by dragonwriter » Mon, Mar 30, 2026, 7:02 PM UTC

SilverElfin wrote: post #52

otterley wrote: post #30

Why wait until 2027, instead of making it effective immediately?

Especially when WA’s ruling party regularly uses false ‘emergency’ declarations to make new laws become effective immediately and because this lets them make new legislation immune to voter referendums (yes they abuse this loophole all the time). They could do the same here. If they don’t, it’s a choice made on purpose.

Washington has a 2/3 threshold in both houses of the legislature to pass emergency legislation, and the majority party is short of a 2/3 supermajority in both houses, so it is actually impossible for them to unilaterally pass emergency bills. Also, emergency laws in Washington are not immune to initiative (repeal or amendment by subsequent laws passed by the voters), but are immune to referendum (popular veto by the voters before going into effect).